Capital flows to emerging markets (excluding China) slowed sharply in 2018, driven by rising interest rates, the strong US dollar and trade tensions, S & P Emergents said in a report of 19 October.
In this report, the agency points to three key trends:
1- Foreign capital flows to emerging markets are likely to be affected by the tightening of monetary policy in the major advanced economies. These flows are likely to decline further and become more volatile over the next two years.
2- Emerging European economies are more exposed than those in other regions to the risk of tightening by the European Central Bank, which will begin the normalization of its monetary policy in 2019.
3- Turkey remains extremely vulnerable to a further deterioration in borrowing conditions, as its external financing needs remain high due to the high level of external indebtedness of its banks and companies.
